Do I pay CMHC insurance in cash at closing?

No — the premium itself is added to your mortgage and amortized. But the 8% Ontario PST on the premium IS paid in cash at closing.

Can I avoid CMHC insurance in Ottawa?

Yes — by putting at least 20% down. Below 20%, default insurance is mandatory on federally regulated mortgages.

Is CMHC insurance the same as life or disability insurance on a mortgage?

No. CMHC protects the lender if you default. It does not pay your mortgage if you die or become disabled — that's separate (and often optional) coverage.

How much is CMHC PST on a typical Ottawa home?

Roughly $1,000–$2,000 in cash at closing on most Ottawa first-time buyer purchases, depending on down payment and price. Budget $1,800 on a $600,000 purchase with 5% down.

Are CMHC, Sagen, and Canada Guaranty premiums different?

Effectively no. All three follow the same tier structure and rates. The choice is your lender's, not yours.

Can I get an insured mortgage on a rental property in Ottawa?

No. CMHC, Sagen, and Canada Guaranty insure owner-occupied homes only. Investment properties require a minimum 20% down payment.

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Ottawa First-Time Buyer Cluster

CMHC Insurance Guide for Ottawa Buyers

If you're buying an Ottawa home with less than 20% down, your mortgage almost certainly requires default insurance from CMHC, Sagen, or Canada Guaranty. The premium is added to your mortgage — but the 8% Ontario PST on the premium is paid in cash at closing.

Most Ottawa first-time buyers don't fully understand how the premium is calculated, how it changes your monthly payment, or how it interacts with the federal 30-year amortization rules.

This guide explains exactly what CMHC insurance is, what it costs at each down-payment tier, how to budget for the PST, and when paying it makes financial sense versus saving longer to put 20% down.

What is CMHC mortgage default insurance?

Mortgage default insurance protects the lender — not you — if you stop making payments and the home sells for less than the outstanding mortgage. It's mandatory on any federally regulated Canadian mortgage with less than 20% down.

Three insurers operate in Canada: CMHC (Crown corporation), Sagen, and Canada Guaranty. Premiums and rules are nearly identical; your lender chooses which to use. Ottawa buyers rarely have a meaningful preference between them.

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Premium rates by down payment

Premiums are a percentage of the mortgage amount and scale by loan-to-value (LTV):

5% down (95% LTV): 4.00% premium
10% down (90% LTV): 3.10% premium
15% down (85% LTV): 2.80% premium
20%+ down: no insurance required

Ottawa worked example: $600,000 purchase with 5% down

Purchase price: $600,000. Down payment: $30,000 (5%). Base mortgage: $570,000. CMHC premium at 4.00%: $22,800. Total insured mortgage: $592,800.

Ontario PST on CMHC premium (8% of $22,800): $1,824 — paid in cash at closing.

The premium itself is not paid in cash — it's bundled into the mortgage and amortized over the loan. But it does increase your monthly payment.

Young family at the front door of their new Ottawa home — First-time buyers stepping into their Ottawa home.

How CMHC interacts with 30-year amortization

Federal rules now allow 30-year amortization on insured mortgages for first-time buyers and on all new-construction purchases. This lowers monthly payments but increases total interest paid.

For Ottawa first-time buyers, the 30-year amortization can be the difference between qualifying and not qualifying for an entry-level home in Kanata, Barrhaven, or Orléans.

Qualifying rules

Maximum purchase price for insured mortgages: $1.5M (raised from $1M in December 2024). Above $1.5M, you need 20% down because insurance isn't available.

All insured mortgages must pass the federal stress test: qualify at the greater of your contract rate plus 2% or 5.25%.

Property must be owner-occupied. Investment properties cannot be insured and require 20% minimum down.

Row of modern detached suburban homes in west Ottawa — Family-friendly suburbs like Kanata, Barrhaven and Stittsville.

Step-by-step: how the premium gets paid

1. You apply for a mortgage with less than 20% down. 2. The lender submits to CMHC (or Sagen/Canada Guaranty) for approval. 3. Insurer approves and quotes the premium. 4. Premium is added to your mortgage principal at closing — you don't write a cheque. 5. The 8% Ontario PST on the premium IS payable at closing, in cash, via your lawyer.

Is CMHC insurance worth it?

For most Ottawa first-time buyers, yes. The premium is small relative to the cost of waiting another two to three years to save a 20% down payment while Ottawa prices typically rise 3–5% per year. Adding $22,800 to a mortgage to enter the market two years earlier almost always wins on a five-year horizon.

If you already have close to 20% saved, the math flips — paying down to 20% to avoid the premium is usually correct.

FAQ

Frequently asked questions

Do I pay CMHC insurance in cash at closing?: No — the premium itself is added to your mortgage and amortized. But the 8% Ontario PST on the premium IS paid in cash at closing.
Can I avoid CMHC insurance in Ottawa?: Yes — by putting at least 20% down. Below 20%, default insurance is mandatory on federally regulated mortgages.
Is CMHC insurance the same as life or disability insurance on a mortgage?: No. CMHC protects the lender if you default. It does not pay your mortgage if you die or become disabled — that's separate (and often optional) coverage.
How much is CMHC PST on a typical Ottawa home?: Roughly $1,000–$2,000 in cash at closing on most Ottawa first-time buyer purchases, depending on down payment and price. Budget $1,800 on a $600,000 purchase with 5% down.
Are CMHC, Sagen, and Canada Guaranty premiums different?: Effectively no. All three follow the same tier structure and rates. The choice is your lender's, not yours.
Can I get an insured mortgage on a rental property in Ottawa?: No. CMHC, Sagen, and Canada Guaranty insure owner-occupied homes only. Investment properties require a minimum 20% down payment.

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